Our Spring 2026 Washington Insider Webinar featured Jay Keese, CEO of Capitol Advocates, a Washington, D.C.-based policy and government relations firm specializing in healthcare. He has extensive experience working with the Centers for Medicare & Medicaid Services (CMS), physicians, employers, payers, health IT firms, and states on critical delivery system reforms.
Keese brought an insider’s perspective on the noteworthy policies and political factors reshaping the business of healthcare, and what they mean for the members they serve.
The ACA Is Being Reshaped Through Regulation
The Trump administration is using regulatory tools rather than legislation to reshape how the Affordable Care Act (ACA) delivers health benefits. Two significant provisions in the U.S. Department of Health and Human Services (HHS) 2027 Notice of Benefit and Payment Parameters signal where policy is heading.
- Expands Access to Catastrophic Coverage: Under the current framework, individuals over 30 cannot enroll in catastrophic plans without a hardship exemption. The proposed rule would extend eligibility up to 10 years for longer-term catastrophic coverage.
- Non-Network Plans as Qualified Health Plans: Allows plans with narrow or no network requirements (also known as “skinny plans”) to be certified as Qualified Health Plans (QHP) on the exchange. This is a significant structural departure from the baseline ACA definition.
Keese’s assessment: the administration lacks the votes to pursue this legislatively, so it’s moving through every available regulatory channel instead. Healthcare organizations should treat the 2027 rule as a signal of structural change to come, not a technicality.
CMS Innovation Models and AI in Decision-Making
This administration has also doubled down on the use of Artificial Intelligence (AI) and technology to try to reduce fraud, waste, and abuse (FWA), while also pushing CMS innovation programs to be more efficient, cost-effective, and transparent. Several new models carry direct implications for payers and healthcare organizations:
- WISeR (Wasteful and Inappropriate Service Reduction): The first-ever prior authorization program in fee-for-service Medicare that leverages AI to expedite review for services vulnerable to FWA. Keese was skeptical WISeR survives a change in administration, but its existence sets a structural precedent.
- ACCESS (Advancing Chronic Care with Effective, Scalable Solutions): Tests new payment models using wearable devices and technology to improve chronic disease management. Applications were due in 30 states by April 2026 for a January 2027 start.
- MAHA ELEVATE (Make America Healthy Again – Enhancing Lifestyle and Evaluating Value-based Approaches Through Evidence): Tests 30 new chronic disease management models focused on MAHA principles.
- GLOBE (Global Benchmark for Efficient Drug Pricing): Applicable to Medicare Part B Drugs; triggers manufacturer rebates when a drug’s price exceeds an international benchmark.
- GUARD (Guarding U.S. Medicare Against Rising Drug Costs): The same international reference pricing model as GLOBE, applied to Medicare Part D drugs.
Regarding AI in coverage decisions, Keese was direct: using algorithms to drive claim review and coverage determinations is becoming politically untenable on both sides of the aisle.
Bipartisan legislation from Senators Warren (D-VA) and Marshall (R-KS) would require a human “learned intermediary” to review any AI-generated coverage denial before it’s issued. Organizations currently using AI in Utilization Management (UM) should treat this as near-certain regulatory direction, not a distant possibility.
PBM Reform: 155 Bills in 40 States
Signed into law on February 3, 2026, the Consolidated Appropriations Act contains what Keese described as “the most sweeping Pharmacy Benefit Manager (PBM) reforms ever enacted,” including:
- De-Linking: Prohibits PBM compensation from being tied to a drug manufacturer’s list price; requires a flat fee model in Medicare and commercial markets beginning January 1, 2028.
- 100% Pass-through of Rebates: Requires PBMs to remit to clients 100% of rebates, fees, alternative discounts, and other remuneration received from manufacturers, GPOs, etc., with quarterly reporting to clients.
- Eliminates Spread Pricing: Requires CMS to define and enforce “reasonable and relevant” Medicare Part D contract terms, including reimbursement and dispensing fees, and establish an appeals process.
- Enforcement of Penalties: Grants CMS authority to impose monetary penalties, and funds CMS up to $188 million for enforcement.
- Increased Transparency: Allows CMS to track payment trends to pharmacies and pharmacy inclusion in PBM networks, including a designation of essential retail pharmacies.
- Audits: Requires audits once per plan year. The Secretary of Labor will establish reasonable confidentiality restrictions for audited Rebate contracts.
At the state level, Keese identified at least 155 bills across 40 states addressing PBM practices. Two stood out: Arkansas House Bill 1150, which sought to bar PBMs or insurers from owning pharmacies, is currently blocked by a federal judge on Commerce Clause grounds. Meanwhile, Tennessee SB 2040/ HB 1959 is a nearly identical bill moving through the legislature committees.
The driving force behind these bills is bipartisan criticism of the vertical integration of payers, PBMs, pharmacies, and drug distribution. Keese flagged the pressure for structural separation as a trend to monitor heading into the 2026 campaign cycle.
What to Watch in the Next 12 Months
Based on Keese’s analysis, these policy developments require near-term operational attention:
- PBM Contracts: Rebate pass-through, spread pricing prohibition, and compensation delinking are now federal law. Contracts and formulary structures built on the prior model need to be reviewed now.
- 2027 Exchange Plan Design: Skinny plan and catastrophic coverage changes could reshape the competitive landscape. Payers, employers, brokers, and consultants should track the final rule closely.
- AI in UM: AI-driven claim review or prior authorization workflows should align with the learned-intermediary standard now ahead of likely regulatory action.
- Midterm Election Outcomes: The potential loss of Senate health committee leadership could create uncertainty around FDA policy, public health programs, and the timing of the next major healthcare legislation.
- State PBM legislation: With 155 bills in 40 states, multistate organizations face a rapidly fragmented compliance landscape. Arkansas and Tennessee are the immediate signals but more states will likely follow.
Watch the full March 2026 Washington Insider Webinar recording for Jay Keese’s complete analysis, including Q&A on vertical integration, Senate succession, and prescription drug cash-pay models.
